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Margaret Wilson To Economist Conference Group

Hon Margaret Wilson
11 August 2000 Speech Notes

"The Employment Relations Bill and the government's programme for resolution of historical Treaty of Waitangi Grievances"

Speech Notes for Economist Conference Group Roundtable 11 August 2000


The Employment Relations legislation has been portrayed by the Opposition as a measure simply to benefit unions. Anyone who has seriously considered the Labour Party's policies from the last election will understand that our "Working Together" policy on employment relations dovetailed carefully with a range of other polices to put in place a comprehensive strategy for economic and social development.

These policies included our "Nation at Work" policy on employment, our "Nation Building" policy on tertiary education and the knowledge economy, our training strategy, and our industry development policy.

These policies were developed in a comprehensive way, and are the foundation for the Government's strategy to achievement of a more productive, high skill, high wage economy.

The Employment Relations legislation is but one policy intervention within that broader strategy.

Employment relations policies need to be seen in the context of our wider labour market strategy, and even more widely, our vision for economic and social development.

To demonstrate what I mean by this, I'd like to talk to you about the type of labour market we have now, and the improvements we would like to see for the future.

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I know that my colleague, Steve Maharey discussed some aspects of this with you yesterday.

It is in the area of labour market policy that there is some overlap between our portfolios, and we are working closely together to ensure that the range of policies for which we are both responsible are all operating to achieve the same objective.

Steve will have outlined to you the Human Capability Framework which addresses the way in which capacity and opportunity are matched in the labour market. To some extent these are issues about supply and demand in the labour market. Labour supply is, of course influenced by a range of demographic variables, and to a large extent New Zealand is affected by similar trends that are happening internationally.

For example, our work force is ageing. There are other demographic trends that are particularly important for New Zealand. Over the next 50 years, Maori will be 20% of the working age population. Our "Closing the Gaps" platform is essential to ensure that the human capital of this group is maximised, not only for improved social equity, but also to maximise our nation's productive potential.

But labour supply - whether people choose to participate in the labour market or not, and the jobs that they seek - is also influenced by a range of attitudinal factors.

These include attitudes to education and skill, the way that people view part-time work in relation to full-time work, the status accorded to particular jobs, how attached people are to their jobs and whether they choose to stay in jobs. We know much less about these aspects of work.

For example, we have no current labour market statistics on labour turnover, and whether this is a problem for employers.

Our labour market currently suffers from several problems. There are two in particular that I would like to note.

Firstly, there is a shortage in the supply of skilled labour. In addition, a quarter of 16 and 17 year olds (and a third of Maori of that age) are not in training or employment. Only 10% of Industry trainees are under 20. And industry training programmes have not been operating in many areas other than those in which traditional apprenticeships existed.

That is why my colleague Steve Maharey has worked so hard to ensure early introduction of the Government's Modern Apprenticeship programme. This programme is targeted at young people, to provide them with skills that will lead to jobs in growing areas of the economy.

A second problem is that immigrants to New Zealand are often highly skilled, but are unable work in the occupations for which they are trained because of issues related to registration. The plight of Doctors is one that has been publicly aired.

In the labour market to which we aspire, we want to ensure that those who wish to participate in the labour market are not faced with barriers.

We want people to have skills that will lead to jobs in the industries where employment prospects are good. And we want those people to be motivated to aspire to excellence in their job performance, because they are doing work which they enjoy and find satisfying, and because they are valued in their workplaces.

The other side of the labour market is the demand side. This is, of course, influenced by a wide range of factors including levels of economic activity, investment, research and development activities and so on.

These affect the nature of jobs that are created – whether they are full-time or part-time, permanent or casual, and the industrial and occupational mix. There are also some qualitative aspects to the type of jobs that are created and maintained.

Are the jobs that are created, for example, those that require a high level of skill - particularly skills that are needed for the "knowledge economy"?

Or are new jobs of the "McJobs" variety – a term which has been used to describe work that requires little skill, allowing work to performed on a casual basis with a high turnover of staff on low wages?

It has been said that the last decade has seen the casualisation of work in New Zealand.

While it is not always clear what is meant by that term, there is certainly some evidence that our labour market is not working as efficiently as it could be.

For example, the incidence of multiple job-holding has increased considerably over the past 6 years.

Just under a quarter of women who have more than one job are engaged in Service and Sales occupations.

Given that the number of people who are employed part-time who say they would like to work more hours, or would like full-time work has also increased, it is not hard to develop a picture of employees working unpredictable hours in more than one job in the service sector because this is they only type of work they are able to get.

So, let me come full circle and tell you how the Employment Relations legislation fits into this picture.

The Employment Relations Act is based on the notion that the employment relationship is just that – a relationship and not a commercial transaction.

We need to recognise the "psychological contact" between employer and employee.

This can only be done if we recognise that employees are stakeholders in their workplaces. Management practice over the past decade has increasingly recognised that employees are increasingly the source of competitive advantage.

Where employees and employers work on the basis of mutual trust and confidence, employees will be more highly motivated, will contribute their skills in pursuit of the employer's business.

Where employees are recognised as important contributors to workplace operation, this results in improved morale and job performance.

Some employer groups have been concerned that the new employment law places its primary focus on an employer's relationship with a union, and that this somehow detracts from an employers' direct relationship with their employees.

It simply does not make sense to suggest that the two are mutually exclusive, or that one has higher priority over the other.

Many employers over the past decade have developed much more sophisticated approaches to management, and in particular, human resource management.

But this does not preclude them from also dealing collectively with their employees through a trade union.

If employers are genuinely motivated to ensure that their employees' best interests are taken into account, they will not feel threatened if any or all of those employees choose to join a trade union, or if they wish to negotiate a collective employment agreement.

The outcomes of the new employment law are expected to be a moderate increase in unionism levels, possibly to about 30 percent of the workforce from the present level of 20 percent and some improvement of the relative position of vulnerable workers in wage negotiations.

This, I hope, will lead to an increase in wages for lower-paid workers in real and relative terms. But the emphasis on good faith means that this can only be done in circumstances in which the employer is able to pay and still make a reasonable return on their business.

There will be no blow-out of wages, or even an immediate substantial overall increase.

Over years, through good faith, I expect an improvement in wages levels overall – I want New Zealand to have an economy capable of delivering high wages and not third-world wages.

But the economic success which this Government wishes to see for New Zealand will not be achieved overnight. It will only occur as a result of the integration of the wide range of economic and social policies that my colleagues and I in the Coalition government have outlined to your conference.

The Treaty

In another role I am responsible for the Government's programme of negotiations. about how to resolve grievances about past wrong-doing by governments of New Zealand.

This wrong-doing includes actions of omission, such as failing to provide appropriate support for Maori communities, to outright acts of violence, repression and destruction of the economic base of Maori communities.

I have been asked to comment on the implications of those negotiations for business.

These issues exist in the context of the South Pacific, in which ethnic and related issues are now a matter of serious strategic concern.

There is a serious imperative to act to establish just relationships on a pragmatic basis in the interests of the whole nation, and of the generations to come.

We have seen parts of Europe literally destroyed by ethnic violence in the last decade.

There is no such threat in New Zealand. And there will not be as long as we deal in a principled and pragmatic way with past grievances and build mature relationships to avoid future difficulties.

The principles we have outlined for the settlement of justified grievances are

 Negotiations will be based on Good Faith

 Restoration of the relationship between the Crown and Maori will result from the settlements

 Just redress will be provided for past wrongs

 There will be Fairness between settlements

 There will be Transparency in the process of settlement

 And Claims will be Government-negotiated

In addition -

 The Government has reaffirmed that Crown minerals (including petroleum), will not be included for consideration in the historical claims process

 I also intend to take a proposal to Cabinet, with the Minister for Maori Affairs, to seek a comprehensive review of the Treaty of Waitangi Act

From the fiscal point of view the total sums involved in the treaty settlements are not great. The government has budgeted 400 million dollars to cover the next four years. There have been, obviously, opportunities for business at the micro level to benefit from the fact that for the first time since the wars last century major new Maori enterprises are being developed.

But the overall economic impact of the settlements does not end with the transfer of funds from state to private Maori hands.

The government is committed to "closing the gaps" between Maori and other New Zealanders. The settlements will not themselves close the gaps. But they will redress past wrongs and allow a new relationship to emerge.

The economic impact will be felt in the release of the tremendous energy, previously absorbed in grievances, which can now be focussed on development.

Good Faith

You will see that there is a commonality of approach between the government's approach to the Employment Relations Bill and the approach to the settling of justified Treaty grievances.

In each case the basis of the relationship is good faith, by which we mean mutual trust and understanding.

In each case this good faith is not always there at the start of the process but can be built and supported as the relationship grows.

And in the end, the establishment of a relationship based on good faith results in the release of an energy and enthusiasm which produces growth; both economic and social.

I expect both processes - Treaty settlements and workplace reform - to feed through into an improved New Zealand Labour market. That market will be increasingly competitive with the foreign Labour Markets which intersect with ours. It will increasingly provide New Zealand employers, employees and business with a better return on their labour and their investment.


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